Plasmacytoid dendritic cells (pDCs), also known as type I interferon (IFN)–producingcells, are thought to play central roles in antiviral immunity and the pathogenesis of some autoimmune diseases. pDCs are produced from hematopoietic stem cells in bone marrow. However, the environmental regulation of the development of pDCs is not fully understood. Here, we show that the numbers of pDCs and their earliest progenitors are severely reduced in the absence of CXCR4, the primary physiologic receptor for CXC chemokine ligand 12 (CXCL12), also known as stromal cell–derived factor-1 (SDF-1) in vivo. In vitro, CXCL12 induces a significant increase in pDC numbers generated from primitive hematopoietic cells, and pDCs and their progenitors migrate to CXCL12. In addition, most pDCs are in contact with CXCL12-abundant reticular (CAR) cells in the intersinal space of bone marrow, although many primitive hematopoietic cells adjoin CAR cells surrounding sinusoidal endothelial cells or residing near the bone surface. Thus we identified CXCL12 as a key regulator of pDC development produced by cellular niches, providing new targets for pDC therapeutic control.